Estate Planning in 2026: A Few Key Tax Law Changes to Discuss with Clients

New Year, New Opportunities?

In the financial industry, each new year brings new rules and new changes. And 2026 is no exception. Keeping up to date may be a challenge but is part of the job for every financial advisor.

When it comes to estate planning, estate administration and elder planning, it’s important to understand what’s changing at both the federal and state levels. The good news? Some of the biggest concerns heading into 2026 have been cleared up. That being said, it doesn’t necessarily mean you can set your plan on autopilot and go on without a single worry in the world.

A Few Words About Estate Tax Exemption

Let’s start with the big picture. Before mid-2025, there was a lot of uncertainty about the federal estate tax exemption (SeyfarthShaw). It was expected to drop significantly—from $13.99 million per person in 2025 to around $7 million in 2026. That kind of change would have affected many more families. But a new law passed in July 2025 changed course, locking in a higher exemption of $15 million per person. Keep in mind that while it’s being called “permanent,” future changes are always possible and staying informed is crucial -- both for estate planners and their clients.

Annual Gift Tax Exclusion: A Simple but Powerful Planning Tool

Another number to keep in mind is the annual gift tax exclusion. For 2026, you can give up to $19,000 per person, per year, without triggering gift taxes or reducing your lifetime exemption (SeyfarthShaw). If you give more than that, you may have to file a gift tax return—but that doesn’t usually mean paying taxes right away. Still, if you’re planning to make larger gifts, it’s worth doing it strategically.

Why Your Role as an Advisor Matter More Than Ever

That’s where a savvy, knowledgeable financial advisor comes in – someone who stays current on legal nuances and is ready to educate clients about the evolving financial landscape. In fact, being knowledgeable isn’t enough -- teaching clients and teaching them well is what sets top planners apart.

What About Elder Planning?

It’s also important to know that there are a few updates on the elder planning side. Medicare Part D will now include a $2,100 cap on out-of-pocket prescription drug costs, along with a maximum deductible of $615 (Burner Prudenti Law). Some plans may offer even better terms. At the same time, Medicare Advantage plans are becoming slightly less available nationwide, and premiums may rise. These shifts make it even more important to review and revisit your clients’ healthcare and financial plans and explain everything in simple terms.

Why the 2017 Tax Law Still Matters

So why do these changes matter? To understand that, it helps to look back. The Tax Cuts and Jobs Act of 2017 made a major impact by doubling the estate tax exemption (CitizensBank). That increase, combined with inflation adjustments, brought us to the nearly $14 million exemption in 2025. However, that law included a “sunset” provision, meaning the higher exemption was supposed to expire in 2026 as stated by Citizens Bank. Basically, the recent legislation cancels that sunset, but your clients’ existing estate plans may still rely on those old assumptions.

Reviewing Beneficiary Designations

That’s why reviewing your clients’ plans is so important right now. Start with beneficiary designations. Take a closer look at retirement plans and brokerage accounts, which should pass directly to the individuals your clients have named, skipping probate entirely. That’s a major advantage—but only if those designations are current and aligned with the overall estate plan.

Trusts: Time for a Check-In

Next, take a look at any trusts you’ve set up. Trusts are powerful tools, but they need occasional check-ins. If your documents were written with the expected 2026 changes in mind, they may include some outdated language or strategies that no longer make sense (BankersLife). A quick review can ensure everything still aligns with your clients’ goals.

Planning Ahead: Strategies to Help Reduce Estate Tax Exposure

Lastly, there is yet another important pointer to keep in mind. Even with the higher exemption, larger estates can still face estate taxes. If your clients’ estates exceed $15 million (or $30 million for couples), there are ways to reduce potential tax exposure. One simple strategy is to use the annual gift tax exclusion consistently over time, according to Illinois CPA Society. In other words, making smaller gifts each year can gradually reduce the size of the estate, resulting in lower taxes.

Another option is donating appreciated assets to charity instead of cash. This allows your clients to potentially deduct the full market value while also removing those assets from their estates (The Tax Adviser). It’s a win-win if charitable giving is already part of your clients’ plans.

Final Thoughts:

So what’s the bottom line for 2026? Ironically, the biggest change is that there isn’t a dramatic change. As stated by various legal sources, the rules are mostly staying the same. But that stability is exactly why now is a great time to review and refine your clients’ plans.

A well-thought-out estate plan isn’t just about taxes. It’s about making sure your wishes are carried out, your loved ones are supported, and your legacy is protected. And the earlier you plan, the more control you have.

FREQUENTLY ASKED QUESTIONS

1. What changed with the estate tax exemption for 2026?
The exemption was expected to drop significantly, but new legislation actually kept it higher at $15 million per individual, and fewer estates will owe federal estate taxes

2. Do clients still need estate planning if they’re below the exemption amount?
Yes. Even if estate taxes aren’t a concern, planning is still critical for beneficiary designations, asset distribution and avoiding probate.

3. What should advisors focus on most right now?
Reviewing existing plans, updating outdated assumptions, and clearly educating clients on how the current rules affect their overall financial and estate strategies.